The impact of mobile Internet usage on mobile voice calling behavior: A two-level analysis of residential mobile communications customers in Germany

Worldwide, the number of people owning a smartphone is growing rapidly. These individuals are able to make voice calls and browse the Internet with the same mobile device. Hence, for mobile network operators (MNOs) the question to what extent mobile Internet (MI) use substitutes or supplements or does not affect established mobile voice (MV) calling gains economic relevance. Unfortunately, the literature on usage interdependencies between these two mobile communication service categories is scarce. Therefore, this study examines the relationship between the monthly number of outgoing MV minutes and monthly MI data traffic in a sample of 11,614 residential postpaid subscribers over 25 months from October 2011 to October 2013. Actual consumption and customer data was extracted from the billing system of the German subsidiary of a multinational MNO. Multi-level analysis of the time-varying and -constant study variables reveals large heterogeneity between sample subjects with regard to their MI–MV associations. At the mean/median monthly level, the demand for conventional MV telephony decreases within the time window under investigation. However, for the majority of customers the relationship between the usage of the two service categories is complementary. Subscribers who are most likely to replace at least some of their MV minutes by MI traffic (1) are heavy MV users in the initial period (October 2011), (2) are heavy SMS users within the time window under study, (3) are male, (4) are older, (5) have a longer tenure with the MNO, (6) have not opted for a MV flat rate, (7) started operating their current handset more recently and (8) are currently not equipped with an Apple iPhone. Implications of the findings for MNO strategies seeking to respond to market changes and for future research are discussed. This study contributes to the literature regarding substitution, reinforcement or neutral effects of MI usage on established mobile communication services.